Renewable energy deals in jeopardy as union objects

Government’s long-awaited signing of agreements with 27 renewable energy independent power producer projects (IPPs) on Tuesday was blocked by an interdict that the National Union of Metalworkers of South Africa (Numsa) and Transform RSA obtained in the high court in Pretoria on Monday night.

After a delay of about two years, newly appointed energy minister Jeff Radebe last week announced that government and Eskom will sign 27 of the agreements pertaining to bid rounds 3.5 and 4 of the department of energy’s acclaimed Renewable Energy Independent Power Producer Procurement Programme on Tuesday morning.

Eskom caused the delay by resisting the signing, but confirmed that it was now prepared to sign the power purchase agreements that would bind it to buy renewable energy from the independent producers for 20 years.

The IPP roll-out will raise the cost of electricity dramatically, because IPP’s cost much more than coal-fired electricity

Eskom argued previously that renewable energy is more expensive than the energy it generates from its own coal-fired power stations and tried to impose a cap on the tariffs previously negotiated between the department of energy and the independents.

The Ramaphosa government however announced that it will proceed with the signing as well as the other renewable projects and the Eskom cap would not apply.

In an early morning press release, Numsa said it obtained an urgent court interdict at the high court to prevent Eskom from concluding the outstanding renewable energy projects, including the power purchase agreements.

In terms of the interdict, Radebe gave an undertaking that he would not sign the independent producers agreements, including the power purchase agreements, until the hearing on 27 March.

Numsa said the signing of these contracts “would be detrimental for the working class of Mpumalanga and the country as a whole.

Coal-fired plants

“The signing of the IPP means that Eskom will require less coal-fired electricity. This is likely to lead to the closure of the coal-fired power plants and the impact will be that at least 30 000 working class families will suffer because of job losses.

“The IPP roll-out will raise the cost of electricity dramatically, because IPP’s cost much more than coal-fired electricity,” Numsa said.

“Electricity prices will skyrocket because of the IPP roll-out; while at the same time that VAT and the fuel price are going up, workers are being paid slave wages of R20/hour and less. The combination of all these factors will have dire consequences for the working class and the poor.

“Numsa is a recognised trade union at Eskom, and we demand the opportunity to make submissions to Nersa (the energy regulator), Eskom and the energy minister on the IPP contracts and the implications for our members and their families. Eskom was planning to sign these agreements despite the fact that a previous application, by the Coal Transporters Forum to interdict them from signing, is still pending at the north Gauteng high court.”

This article was originally published on Moneyweb and is used here with permission